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$A drops on RBA's downbeat outlook

Belinda Merhab

The Australian dollar is lower after the Reserve Bank delivered a more downbeat view of the economy.

At 1700 AEST on Tuesday, the local currency was trading at 93.51 US cents, down from 94.07 cents on Monday.

The minutes of the central bank's June board meeting highlighted the RBA's concern about the impact the tough federal budget and expected falls in mining investment could have on the economy.

The Australian dollar fell half a US cent following the release of the minutes.

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"The central bank delivered a relatively downbeat outlook for economic growth in light of cuts to fiscal spending and uncertainty over whether growth in non-mining sectors of the economy can counteract the expected drop-off in resources investment," FXCM market analyst David de Ferranti said.

"With wage growth also expected to remain low, the board seems unconcerned about the potential for inflation to pick up, which further suggests that we will not see a shift in gears from the RBA any time soon."

The RBA has kept rates at a record low 2.5 per cent since August and indicated they would remain unchanged "for some time yet".

At 1700 AEST, the Australian dollar was at 95.31 Japanese yen, down from Monday's close of 95.76 yen, and at 68.94 euro cents, down from 69.47 euro cents.